As Ronald Reagan, who turned 100 this past week, once said, “The problem is not that people are taxed too little, the problem is that government spends too much.” Coincidentally, that’s exactly the approach of New York state governor Andrew Cuomo (D.) as he attempts to fix the state’s roughly $10 billion budget deficit. Rather than raise taxes or budgets, Cuomo instead went after government spending in last Tuesday’s budget proposal, which, if passed, would represent the state’s first budget reduction in more than a decade. Among the targets of Cuomo’s spending cuts was Medicaid.

According to the Wall Street Journal, New Yorkers pay more than double the national average on Medicaid at $2,488 per capita. Aside from being the most expensive Medicaid program in any state, it also has the most optional services. The $53 billion program has been called into question by its over 5 million recipients, according State Medicaid Director Jason Helgerson, indicating that changes to the program were necessary.

Cuomo’s budget proposal called for $982 million in cuts toward Medicaid, according to the New York Post. Reuters reported that the program was supposed to receive a budget increase of $2.85 billion, or a 13% increase, prior to Cuomo’s proposal. The proposal limited future growth in the Medicaid budget to simply the rate of inflation of medical services. Though the proposal identified the amount that should be cut, no specific areas of Medicaid were included. Rather, Cuomo left those decisions up to a 27-member task force which he appointed in January. Identifying what should be cut, however, could be difficult.

“It will require alchemists, not policy wonks or providers, to transform cuts of this magnitude into gold,” said Daniel Sisto, president of the Healthcare Association of New York State and a member of the task force, in an interview with the New York Times. Helgerson also demonstrated some apprehension.

“We know it’s a tight time turnaround,” Helgerson told Reuters.

The task force was reviewing over 2,000 reform ideas, according to the Wall Street Journal. The New York Times suggested that the task force would go after home care, the fastest growing healthcare program. The program was a branch of Medicaid created to provide a cheaper alternative to nursing homes by providing government funded medical care at home to poor or elderly patients. However, problems have arisen as costs have gone up from 2003 to 2009, from $760 million to $1.35 billion, despite the fact that the amount of beneficiaries have actually gone down.

Other proposals include a merit-based system in which health care providers that failed to meet certain qualifications would be penalized. This idea, however, was not accepted whole-heartedly by the task force members. As reported in the Wall Street Journal, members such as Richard Gottfried, the Assembly Health Committee Chairman, dislike the notion that there is no reward for good quality. Senate Health Committee Chairman Kemp Hannon agreed with Gottfried, citing former Governor David Patterson’s similar approach to Medicaid spending in which penalties were levied on poor quality. The system did make the state money, but didn’t improve hospital quality.

"This proposal…reduces reimbursements to people if they don't produce good outcomes, but it doesn't produce any mechanism for changing the way those systems operate," said Gottfried to the Wall Street Journal.

These proposed Medicaid cuts are part of Cuomo’s attempt to cut the state budget by 2.7%, reducing it to $132.9 billion. Cuomo, who called New York “functionally bankrupt”, will attempt to determine these cuts before April 1, the beginning of the next fiscal year.